Security fears as Chinese agree to save British Steel

A CHInESE company led by a former Communist party official has promised to bring back the ‘glory days’ of British Steel with a rescue deal that is expected to save thousands of jobs.

After months of uncertainty over the company’s future and a spiralling bill for taxpayers, the Government’s Insolvency Service announced a deal with China’s Jingye Steel.

The agreement, which it is hoped could save the majority of British Steel’s 4,000-strong workforce, was welcomed by the industry and union leaders.

It still needs to be signed off, but should also provide job security for many of the 20,000 workers in the company’s supply chain.

However, critics raised concerns about the security implications of selling a firm which produces a third of steel used in the UK to a company with close links to the Chinese government.

The amount being paid was not confirmed but it is reported to be between £50million and £70million. Jingye has pledged to invest £1.2billion in the business over the next decade, upgrading the plants and machinery.

Some job cuts are likely because it has made it clear it plans to make British Steel profitable again.

Jingye’s 42-year-old chairman Li Ganpo insisted the purchase is ‘the beginning of a long journey’ and not an attempt to make a quick profit.

In a colourful presentation the firm recently pledged to ‘revitalise the glory’ of British Steel. Business Secretary Andrea Leadsom – visiting Scunthorpe for the announcement – said she was ‘delighted to hear the excitement of employees and their families first hand’.

But Julian Lewis, the Tory chairman of the last Parliament’s defence committee, warned: ‘It is a sad state of affairs that British Steel is being kept going by investment from a country like China that is no friend of ours. The steel industry is a strategic asset.’

Labour’s former transport secretary Lord Adonis said Chinese firms had ‘destroyed British Steel by dumping cheap steel’ and ‘now it buys the remnants for a pittance’.

The Government will be relieved to get the business off its books. It is estimated to have been costing it £1million a day since it collapsed in May.

A Whitehall source insisted: ‘There are absolutely zero national security concerns.’

‘A sad state of affairs’